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Private-sector leaders criticize proxy advisory services (2023)
| Environmental, social, and corporate governance |
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| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
Treasurer Moore’s comments about proxy advisory services came the same week as two private-sector critics of ESG also spoke out about the companies: Elon Musk, CEO of Tesla, and Vivek Ramaswamy, author of Woke, Inc. and co-founder and executive chairman of Strive Asset Management:
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Elon Musk likes to attack circles of power. It's as if he's on a mission…. During the past few weeks, the Techno King, as he's known at Tesla (TSLA) - Get Free Report, has lashed out at Anthony Fauci, the immunologist who was the face of America's response to the Covid-19 pandemic…. Musk then attacked the World Economic Forum, the last convention of which has just concluded in Davos, Switzerland. The billionaire accused the forum of acting like an unpopular world government…. But while his attacks on Davos are still hot, the global CEO is targeting two other entities that also symbolize power. These are the two largest proxy-advisory firms: Institutional Shareholder Services and Glass-Lewis. For Musk, ISS and Glass Lewis are the real masters of the stock market. In his eyes, their power is disproportionate. The two firms provide advice to shareholders on executive compensation and the voting for board members. Their advice is both considered and ignored. "Far too much power is concentrated in the hands of 'shareholder services' companies like ISS and Glass Lewis, because so much of the market is passive/index funds, which outsource shareholder voting decisions to them," Musk criticized on Jan. 24. As a result, "ISS and Glass Lewis effectively control the stock market."… According to Jim Woodrum, clinical professor of executive education at the Kellogg School of Management at Northwestern University, muted criticism of ISS and Glass Lewis can be heard in the boardrooms…. But boardrooms have become dependent on ISS and Glass Lewis, Woodrum warned. The most popular boardroom conversation is, he says, "'What does ISS think about that?' "This has also led to a homogenization of boardroom practices, as more and more companies come into compliance with the latest edict from ISS and/or Glass Lewis," the professor said.[1] |
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Musk’s comments came in response to a tweet posted by Ramaswamy:
| “ | I’ve traveled the country to meet with state pension funds, treasurers, and corporations. It is *staggering* how much influence BlackRock & ISS have wielded over these institutions. They captured the system in red & blue states alike. Time to bring new alternatives to the table.[1] | ” |
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
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